Investing your hard-earned money in the stock market is historically an excellent path towards building long-term wealth.
But there are no guarantees.
Some stocks can surge and double your money, or more, very quickly.
Like Synlait Milk Ltd (ASX: SM1). Shares in the dairy processing company are up 161% in just six months.
Of course, you may have thought Cettire Ltd (ASX: CTT) stock looked appealing following the strong performance in 2023. But shares in the online luxury goods retailer have crashed 76% since last March.
So, the first thing you can do to boost your long-term returns in the stock market is to diversify. Try to build a portfolio of at least a dozen different shares operating in various market sectors and locations. This will reduce the risk of your entire portfolio taking a big hit if a single company or sector comes under pressure.
The second thing you can do to help boost your chances of success in the stock market is to think long-term.
Like legendary investor Warren Buffett said, "Our favourite holding period is forever."
Buffett also advised, "Embrace what's boring, think long-term, and ignore the ups-and-downs."
Which brings us to the latest research analysis from eToro, which shows how loyalty is as important in investing as it is in relationships.
Patience counts in the stock market
According to the data from eToro, holding the S&P 500 Index (SP: .INX) for one year gives you a 72% chance of a positive return. That increases to 87% over 10 years, while holding your investment in the stock market for 20 years ups your chances of a positive return to 95%.
While eToro's data doesn't include the S&P/ASX 200 Index (ASX: XJO), a similar pattern was evident in the United Kingdom's stock market. Achieving a positive outcome on the FTSE 100 rose from 66% in one year to 83% over 20 years.
Commenting on the data, Josh Gilbert, market analyst at eToro, said:
As the saying goes, time in the market beats timing the market. That's very clear from our new data and it goes to show why letting emotions take over in markets isn't a smart idea. Let's just say that selling at the first sign of a 'red flag' might not be the best choice when it comes to investing.
Gilbert added that when investing in the stock market, you should be aware of your time horizon:
It's really important for investors to understand their time horizons, this can make a difference between flirting or finding that long-term connection. Flirting in financial markets comes with risks, but making that long-term commitment is more likely to be rewarding.
So, how about investing in those stocks that you're just convinced will double your money?
"Just because there was an initial attraction, doesn't mean it will blossom into a long-term love story," Gilbert cautioned. "Although thematic investing can be a great strategy when investing, it's important not to get too love-struck and remember to call it a day before things go sour."
The rapid rise and equally rapid fall of some companies in the stock market during the COVID pandemic offer prime examples.
Stocks like Zoom Communications Inc (NASDAQ: ZM) and Peloton Interactive Inc (NASDAQ: PTON) roared higher during the lockdowns. But they have since come crashing back to earth and continue to underperform the wider stock market.
"By contrast, even companies with strong fundamentals, a competitive edge and growth potential supported by long-term macro trends can go through rocky periods," Gilbert said.
"Investors who stand by them through thick and thin may ultimately be rewarded for their patience and commitment," he added.
He noted that Broadcom Inc (NASDAQ: AVGO), for example, saw its share price crash 53% from January to March 2020 but recovered 1,450% by the time of its all-time high in January 2025.
